|
|
 |
|
Viewing report
|
|
|
|
Colombia Food & Drink Report Q4 2006
Business Monitor International, Feb 2007, Pages: 76
The Colombia Food & Drink Report provides independent forecasts and competitive intelligence on Colombias food & drink industry.
The Colombian economy will close out 2006 in full health. Real GDP growth of 5.2% in 2005 was the fastest out-turn since 1993, and we expect 2006 to be another year of strong growth - in the region of 4.8% y-o-y. Considering the high peso, domestic demand will necessarily be the main engine for growth, with improvements in the security scene feeding through to increased consumer and investor confidence (although there has been an increase in violent incidents and government-guerrilla-paramilitary clashes in Q406).
Colombias mass grocery retailers (MGRs) have responded to the improved outlook by announcing ambitious expansion plans for 2007. This includes Carrefours announcement to open between five and eight additional shopping malls, as well as seven new hypermarkets, and Carulla Viveros programme of opening nine new outlets in late 2006 and 2007. Further indication of a promising market came from the fact that Wal-Mart registered several brands and trademarks in the country in January 2006, reinforcing speculation that it may enter Colombia sometime soon.
Considering the strong economy and retailers investment intentions, we foresee MGR sales continuing to grow over the forecast period, from US$5.96bn in 2005 to US$11.9bn by 2010, a growth of 98.7%. The actual development will, however, be highly dependent on developments in the political and security spheres, of which we remain cautiously optimistic.
The final quarter of 2006 has brought more speculation and activity around the theme of MGR mergers and acquisitions. The talk of the town is still of Carrefour seeking an alliance, possibly with Carulla, and of Wal-Mart doing the same, though with whom remains unclear; while Almacenes Exito has acquired 19.8% of Carulla, its closest rival. This appears to signal the end of the matter as far as Carullas fate is concerned - at least for the moment - for Exito has designs on taking complete control of Carulla.
Meanwhile, Chilean retailer Cencosud has finally shown its hand, with an offer in November 2006 for 24.5% of Almacenes Exitos shares. If all approvals go ahead, we expect the transaction to be completed early in 2007. It is unclear how French group Casino, one-third owner of Exito, will react to such a transaction. Less clear still is how the Chilean retailer will affect Exitos 2007 expansion plans: the presence of a new, cash-rich partner may enable Exito to accelerate its already aggressive expansion plans in Colombia. Alternatively, Cencosuds greater international experience may lead Exito to finally act upon its long-held desires to enter the Ecuadorian and Peruvian markets.
For food and drink producers, the lead up to the 2006 holiday season was full of domestic cheer; very high demand for their products from MGRs was reported in both October and November. And with GDP growth expected to continue in 2007, production lines will continue to be active in the New Year. Segments to watch include confectionery and non-carbonated drinks, both benefiting from the rising number of young people in the lower-middle and middle-income groups.
Seasonal cheer on the external front, though, will be less fulsome. Exporters report declining margins, even losses in some cases, as a result of the high peso exchange rate, particularly against the US dollar and the euro. The huge growth over recent years in the export of fruit, vegetables and flowers from Colombia to the United States and the EU has been stopped in its tracks in 2006 as the peso has risen still further, pricing products out of the market. Much of Colombias best farmland is now growing not just traditional export crops, such as coffee, banana, sugar and cotton, but also products for export such as mango, soybean and roses. Dole Food Company laid off over 3,000 pickers and field workers in Colombia in October 2006, citing the high exchange rate and high overall labour costs as two of the reasons.
Customers who bought this item also bought
Almacenes Exito S.A.
Mexico Food & Drink Report Q4 2006
Argentina Food and Drink Report 2007
Colombia Food and Drink Report Q4 2008
Organizacion Soriana SAB de CV
Peru Food and Drink Report 2007
Colombia Food and Drink Report Q4 2009
Colombia Food and Drink Report Q1 2009
Coffee in Colombia
Tea in Colombia
Dairy Food in Colombia to 2012
Colombia Food & Drink Report Q1 2008
|
|
|
|
